The bailout was put together to counter an earlier bid byU.S. private equity firm KKR & Co amid worries the firm's technology could fall into foreign hands, sources familiar with the talks have told Reuters.

Renesas, battling to avoid the fate of fellow chipmaker Elpida Memory, which was driven into bankruptcy earlier this year, said it would spend 60 billion yen of the total support on research and development and capital spending related to its core micro controller business.

The company said it was also requesting another 50 billion yen in support from the government fund.

INCJ CEO Kimikazu Noumi told a joint news conference the fund was still deliberating whether to agree to the request but if it did supply the extra money, Renesas could use it to expand abroad through mergers and acquisitions.

"The fact that clients are putting up money is positive since it means Renesas will be able to gain some business from them," said Akira Minamikawa, vice president and principal analyst at IHS iSuppli in Tokyo.

"But domestic firms' influence over the company could prevent the firm from expanding abroad," he said.

Renesas president Yasushi Akao denied that clients-turned-shareholders would exert influence over the company's products. "I don't see this becoming a problem. We have the government fund holding a two-thirds stake and this means they will take leadership on this matter," said Akao.

The company also cut its sales forecast for the year to March to 820 billion yen from a previous 868 billion. It still sees an operating profit of 21 billion yen for the fiscal year.

Renesas has slashed more than 7,000 jobs this year and vowed to sell or shutter eight out of its 18 Japanese plants within three years in return for a 161 billion yen syndicated loan from four Japanese banks in September. The company said on Monday it was considering various cost cutting moves, but did not announce further job cuts.

The latest bailout comes on top of 97 billion yen Renesas received from its main banks and major shareholders - Hitachi, NEC Corp and Mitsubishi Electric.

After the government-led bailout, NEC will see its stake in Renesas reduced to 8.9 percent, while Hitachi will be cut to 7.7 percent and Mitsubishi Electric 6.3 percent.

As of March, Hitachi had 30.6 percent, Mitsubishi Electric 25.1 percent, and NEC and its retirement fund held a combined 35.5 percent.

Renesas shares ended up 3 percent ahead of the announcement on Monday, but have lost close to half their value since the start of April, the beginning of Japan's fiscal year. Tokyo's benchmark Nikkei index has slipped 5 percent over the same period.